Hands up for those of you who have a mixture of assets that were bought because they were available, because intense promotional activity made you buy them, or because they seemed like a good idea at the time? Are you sitting on investments meant to be short-term speculations that went wrong and have turned into long-term holdings? Investments should not be made for the sake of investing. They should be made to help you achieve your desired return at an appropriate level of risk. Here's how you can tidy up your existing collection of investments into a portfolio that fits into your overall financial plan.

Forget Sunk Cost … But Minimise Trading
The first thing that you must learn is not to get emotionally attached to your investments. When evaluating an investment, new or old, the "sunk cost" is irrelevant. Regardless of the historic acquisition cost, the question to ask yourself is: "if I did not hold this investment already, but was considering investing, would I buy it given the current outlook and the current price?" This requires discipline as even if it means making a loss, you need to give up investments that are not yielding the expected level of returns or if the investments are no longer in line with your current financial goals.

However, this does not mean that you should sell everything and start again, as trading in shares or unit trusts is expensive. Furthermore, you may just end up with some very similar holdings once you have reinvested - after having spent good money on sales or broking fee! Hence, the second thing that you need to do is to minimise trading. Sit down with a pencil and paper, clarify your investment priorities, and work out a programme of purchases and sales that minimises actual turnover.

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